Correlation Between Weatherford International and Adams Resources
Can any of the company-specific risk be diversified away by investing in both Weatherford International and Adams Resources at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Weatherford International and Adams Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weatherford International PLC and Adams Resources Energy, you can compare the effects of market volatilities on Weatherford International and Adams Resources and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Weatherford International with a short position of Adams Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weatherford International and Adams Resources.
Diversification Opportunities for Weatherford International and Adams Resources
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Weatherford and Adams is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Weatherford International PLC and Adams Resources Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adams Resources Energy and Weatherford International is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Weatherford International PLC are associated (or correlated) with Adams Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adams Resources Energy has no effect on the direction of Weatherford International i.e., Weatherford International and Adams Resources go up and down completely randomly.
Pair Corralation between Weatherford International and Adams Resources
Given the investment horizon of 90 days Weatherford International PLC is expected to under-perform the Adams Resources. But the stock apears to be less risky and, when comparing its historical volatility, Weatherford International PLC is 1.4 times less risky than Adams Resources. The stock trades about -0.09 of its potential returns per unit of risk. The Adams Resources Energy is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,594 in Adams Resources Energy on August 24, 2024 and sell it today you would earn a total of 1,130 from holding Adams Resources Energy or generate 43.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weatherford International PLC vs. Adams Resources Energy
Performance |
| Timeline |
| Weatherford International |
| Adams Resources Energy |
Weatherford International and Adams Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weatherford International and Adams Resources
The main advantage of trading using opposite Weatherford International and Adams Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weatherford International position performs unexpectedly, Adams Resources can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Adams Resources will offset losses from the drop in Adams Resources' long position.| Weatherford International vs. Bristow Group | Weatherford International vs. RPC Inc | Weatherford International vs. NOV Inc | Weatherford International vs. Oceaneering International |
| Adams Resources vs. PrimeEnergy | Adams Resources vs. Barnwell Industries | Adams Resources vs. Acme United | Adams Resources vs. CKX Lands |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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